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INTRO

INTRO

CEO’s Message Hankook Tire & Technology’s 10 Years of Milestones Company ProfileSustainable Value ChainSDG Performance

INTEGRATED CSRMANAGEMENT SYSTEM

MONITORING AREAS

CSR FOCUS AREAS

APPENDIX

4

Over the past year, we have encountered a number of challenges stemming from the growing uncertainty in global financial markets and fierce competition in the auto industry. In addition, the steady expansion of EV-related industries and seg-mented and diversified customer needs mean we must proactively respond to a constantly changing market environment.

In response, we formulated strategies to face these challenges with agility and were able to enjoy concrete results, including the launch of our second generation of tires designed for the needs of EVs, the supply of tires for the Audi RS2, and the acquisition of both Model Solution, a Korea-based digital prototype solution com-pany, and the German tire retailer Reifen-Muller. In addition, we ranked first in the annual tire test performed by Auto Bild, a leading German automobile magazine based in Hamburg, proving the well-deserved reputation of the Hankook brand.

We also concentrated efforts on creating social and environmental value. Since the establishment of a company-wide CSR management system, customized activities by region have been conducted within our overseas networks. As the role of companies in protecting the environment and managing supply chain magnifies, we declared an SNR (sustainable natural rubber) policy in response.As a recognition of our efforts at sustainability management, we have been listed on the Dow Jones Sustainability Indices (DJSI) World Class for the third consec-utive year.

This year marks the 10th anniversary of our publishing this CSR report. This re-port will serve as an opportunity for us to look back on our efforts over the last decade and renew our commitment to ensuring sustainable management.Moreover, we would like to proactively communicate with our stakeholders by transparently disclosing last year’s performance and this year’s targets here in this report. We will not be complacent with our short-term gains, and will con-tinue to pursue our long-term goals through the establishment of our CSR Vision 2030 Roadmap.

Hankook Tire & Technology has been supporting the UN Global Compact and the SDGs and will continue to faithfully implement them in pursuit of the sustain-able development of human society. We will also proactively fulfill our corporate social responsibility while enhancing our global competitiveness. Drawing upon our unwavering commitment to sustainable management, we look forward to your interest and support. Thank you.

Distinguished stakeholders,First of all, I would like to express my gratitude to all the stakeholders in our enterprise for your continued interest and support.

President & CEO Hyun Bum Cho

CEO’s Message HANKOOK TIRE & TECHNOLOGY 10th ANNIVERSARY REPORT 2018/19

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APPENDIX

HANKOOK TIRE & TECHNOLOGY 10th ANNIVERSARY REPORT 2018/19

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APPENDIX

Hankook Tire & Technology’s 10 Years of Milestones

Sales (Unit: KRW 100 million)

51,451 58,133 64,890 70,291 70,692 66,808 64,282 66,218 68,129 67,951

This year marks the 10th anniversary of publishing our CSR report. We would like to share with you our efforts and achievements over the last decade.

- Established a dedicated organization for CSR management

- Launched the CSR Strategy Committee (management) and the CSR Steering Committee (working-level)

- Acquired OHSAS 18001 and KOSHA 18001 certification

- Built an integrated EHS management system

- Formulated a framework for corporate philanthropy

- Listed on the DJSI Korea for the first time. - Implemented a risk monitoring system (RMS)

- Established a CSR committee at the Han-kooktire China Headquarters

- Joined and supported the UNGC- Listed on the DJSI Korea for the second consecutive year

- Established a CSR management system at the Hankooktire Europe Headquarters

- Received a special award by CDP Korea- Listed on the DJSI Asia Pacific for the first time

- Declared human rights management (compliance with the UN Guiding Principles on Business and Human Rights)

- Disclosed our achievements on sustainable value chain and SDGs

- Declared our CSR Vision 2020 Roadmap- Launched a social housing project for those with housing issues- Established Hankook Donggrami Partners according to the ‘subsidiary-type standard business system’

- Listed on the DJSI World for the first time- Acquired ISO 22301 certification at the Daejeon and Geumsan plants

- Established a CSR committee at the Hankooktire America Headquarters - Listed on the DJSI World for two years in a row- Became the first company in Korea to be included on CDP Supplier Engagement Leader Board

- Acquired ISO 22301 certification at the Hungary plant

- Declared a sustainable natural rubber policy

- Declared the E-Circle- Listed on the DJSI World for the third consecutive year

- Implemented a CSR management system at the Indonesia plant and ASEAN-India offices

- Implemented a framework for crisis man-agement at the enterprise level

- Obtained a green company certification at the Geumsan Plant

- Founded the Allkidstra orchestras in Geumsan and Chubu

- Listed on the DJSI Asia Pacific for the second consecutive year

- Selected for Carbon Management Sector Winners by CDP Korea

20182009 2010 2011 2012 2013 2014 2015 2016 2017

5

Operating profit (Unit: KRW 100 million)

6,202 6,702 5,673 9,129 10,310 10,316 11,032 7,9348,850 7,027

6

Company Profile

Company OverviewSince its establishment in 1941, Hankook Tire & Technology has promoted its brand value and strengthened quality competitiveness to achieve technological leadership. As a result, we have grown into the 7th largest tire maker in the world, offering the best possible driving experience to customers in 180 countries.


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1) OE: Original Equipment2) The company was established by spinning off the tire business of

Hankook Tire Co., Ltd. as of September 1, 2012, and listed on the stock market on October 4, 2012

Global NetworkWe are implementing customized strategies within our global network consist-ing of five regions to achieve balanced growth from advanced and emerging au-tomotive markets. To meet different customer needs, our sales network encom-passes Europe, the Americas, the Middle East, Africa and Asia-Pacific regions. In addition, ‘tire communication channels’ (OE tire offices) are being operated in Korea, China, Germany, the US, and Japan for the close cooperation with lead-ing car makers.

Korea

Middle East, Africa & Asia-Pacific

Europe

ChinaAmerica

Regional Headquarters_1 Plant_2

Others_Hankook Technodome and Academy House

Regional Headquarters_1 Plant_3 Sales Office _15

Others_China Technical Center

Regional Headquarters_1 Plant_1 Subsidiary_4 Sales Office _2

Others_America Technical Center


Others_Japan Technical Liaison Office


Others_Europe Technical Center

Company Name Hankook Tire & Technology Co., Ltd.

Global Sales KRW 6.7951trillion

Operating Profit KRW702.7billion

Operating Margin 10.3%

Total Assets KRW 9.7964 trillion

Total Equity KRW 6.7903 trillion

Date of Establishment September 3, 20122)

IPO (Initial PublicOffering)

October 4, 20122)

CEO Hyun Bum Cho, Soo Il Lee

Main Business Manufacturing, reproducing, processing andselling automobile tires, tubes, and components

Headquarters 133, Teheran-ro, Gangnam-gu, Seoul, Korea(Yeoksam-dong)

Telephone 82-2-2222-1000

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Kingstar means ‘tires that best fit the road conditions’,and carries the product brand name ‘Road Fit’.

Company ProfileMission & Vision

Laufenn was created in an aim to deliver a practicaland economical driving experience to drivers and wasdesigned to meet the needs of consumers who pursue a simple yet sophisticated lifestyle. Laufenn has wideranging product brands of S, G, X, and I Fit.

Aurora, which means ‘tires that know the road well’, isbetter known among our overseas clients and carries the product brand name ‘Route Master’.

Hankook represents all Hankook Tire & Technology brands both in Korea and overseas. We offer wide-ranging sub-category brands to match the segmentation of vehicle models and products that reach out to diverse customers across the globe.

Product

Ultra high performance tires and racing tires

Economical tires for the domestic market

Eco-friendly tires for the global market VAN tires

Korea’s first eco-friendly tires Winter tires (Studless)

SUV tires Winter tires (Stud)

Mission Frame Vision Frame

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Sustainable Value Chain

For sustainable growth, we effectively distribute to our stakeholders the economic, social and environmental value created across the entire process of the value chain from R&D to procurement, manufacturing, use of products, recycling and disposal.

⋅ Persons in charge of R&D 1,085 persons

⋅ Percentage of Persons in charge of R&D 5.3%

⋅ Percentage of R&D expenditures 2.82%

⋅ Domestic and international registration of new patents 88 items

⋅ Procurement of raw materials KRW 2,230.1 billion

⋅ Raw material suppliers subject to CSR assessment 47

⋅ Newly-hired employees : 1,860 persons

⋅ Training hours per employee 52 hours

⋅ Training expenses 1) KRW 1.9 billion

⋅ Employee salary KRW484.9 billion

⋅ Recycled waste : 38,701,599kg

⋅ Percentage of treated water recycling 44.05%

⋅ Energy consumption intensity: 10.45GJ/ton of finished product

⋅ GHG emissions intensity 1.006tCO2-eq/ton of finished product

⋅ Advertising expenses KRW 222 billion

⋅ Global retail network 5,257 stores

⋅ Corporate tax KRW 167.3 billion

⋅ Dividends KRW 55.7 billion

⋅ Donation to local communities 1)

KRW 3.28 billion

⋅ Percentage of eco-friendly products (based on quantities) 64.7%

⋅ Percentage of end-of-life tire recycling 95.3%

⋅ Sales of retread tire 8,757

⋅ EPR (Extended Producer Responsibility) contributions KRW 2 billion

1) Since the data was calculated based on the consolidated financial statements disclosed in our 2018 business report, training expenses and donation were partially reflected.

R&D Raw Materials Manufacturing Recycling & DisposalDistribution Use

Sales KRW

6,795.1billion

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SDG PerformanceWe are in support of the UN Sustainable Development Goals (SDGs) and committed to addressing environmental and human issues. In particular, we will concentrate on four targets: achieving gender equality and empowering women; promoting economic growth and employment; addressing inequality; and responding to climate change issues

Achieve gender equality and empower all women and girls

· Provided training on the prevention of sexual harassment to 6,688 employees and conducted monitoring activities

· Established a human rights management system based on the UN Guiding Principles on Business and Human Rights to promote gender equality and empower women

Promote sustained, inclusive and sustainable economic growth, employment and decent work for all

· Made a total of KRW 339,553 million worth of investments in 2018 (unit: KRW million) ① Korea: 187,136② China: 82,598 (global)③ Europe: 24,240④ America: 28,543⑤ Asia-Pacific: 15,839⑥ Other regions: 1,196

· Hired a total of 1,860 employees in 2018 (unit: employees)① Korea: 166② China: 688③ Europe: 186④ America: 745⑤ Asia-Pacific: 75

Reduce inequality within and among countries

· Conducted employee volunteer activities: 5,993 employees / 478 activities / 20,403 hours

· Three major Mobility projects for the vulnerable ① Car donation: 50 cars ② Tire donation: 6,253 tires (global) ③ Tuieum Bus: 620 buses

· Operated the DreamWith project for strengthening the capacity of local communities in addressing childcare and youth issues: 14 organization from local communities / 224 participants

Take urgent action to combat climate change and its impacts

· Reduced 17,408tCO2-eq annually through activities, including adopting equipment with high energy efficiency, recovering waste heat and improving processes

· Optimized the transportation routes of finished products to reduce GHG emissions

· Launched the low-carbon tire Enfren Eco, with CO2 emissions reduced by 12% compared to those of existing products (cutting 43 kgCO2-eq per product)

· Reduced GHG emissions through the sales of key low-carbon products: 3.52tCO2-eq/ ton of finished product, cut GHG emissions through the sales of our low-carbon products: 3.32tCO2-eq/ ton of finished product


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INTEGRATED CSRMANAGEMENT SYSTEM INTROINTEGRATED CSR

MANAGEMENT SYSTEM

Integrated CSR Management SystemCSR Committee Operation and MonitoringCSR Management in Our Overseas NetworkStakeholder communication and participationStakeholder CommitteeCSR Vision 2020 RoadmapMateriality AnalysisCSR Steering Wheel 2018/19

MONITORING AREAS

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11

Integrated CSR Management System

Our declarationHankook Tire & Technology strives to enhance corporate value and pursue ro-bust and sustainable growth together with its customers, business partners, lo-cal communities, and employees by fulfilling its corporate social responsibility. To this end, we aim to promote CSR as the business management foundation upon which our employees act at work. Through enterprise-wide integrated CSR management, we will offer our stakeholders the greatest possible value and lead sustainable development and growth not just in the tire sector, but across the entire mobility industry.

Responsible organizations Our integrated CSR management system is operated by the CSR Team. This team formulates company-wide CSR policies and plans activities under the supervi-sion of the head of the HR Division. These policies are reported to and approved by management on the CSR Strategy Committee. The team operates the CSR Steering Committee to provide guidance on policy direction to steering commit-tees, monitors their quarterly activities, and discusses issues for their resolution. In order to support the seven sub-committees in their strategy formulation and operations, two working-level employees with related expertise from the CSR Team and the team responsible are assigned to each sub-committee. They pres-ent opinions from the perspective of experts at the quarterly committee meet-ings.

CSR committeesWe have the CSR Strategy Committee, CSR Steering Committee, and CSR work-ing-level council. The Steering Committee consists of seven committees in which enterprise-wide CSR activities are conducted. The results are reported to the CSR Strategy Committee to discuss future direction.

COO

Head of Car Life Business Headquarters

Head of Production

and Engineering Staff Office

Head of R&D Staff Office

Head of America

Headquarters

Head ofEurope

Headquarters

Head of China

Headquarters

Head of Corporate

Management & Finance Staff Office

CSR Steering Committee

CSR working-level council

1) EHS: Environment, Health and Safety

CSR Strategy Committee


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Product environment committeeEnvironmental management

Health and safetyEHS1) committee

CSR Team

Climate change committee Climate change

Employee committee Employees

Ethics management committee Ethics management and compliance

Corporate philanthropy committee Philanthropy

Supplier committee Suppliers

Coordinators from each steering committee

12

CSR Committee Operation and Monitoring To ensure integrated CSR management at the company level, the CSR Strategy Committee and the CSR Steering Committee consisting of seven steering com-mittee are operated under the supervision of COO. Pertinent activities are re-ported and monitored to meet targets in accordance with plans.

We strive to systematically conduct CSR activities at worksites through the inte-grated CSR management system. The annual CSR Strategy Committee meeting chaired by COO is held in February or March to discuss key issues identified in the previous year, share domestic and international CSR trends, and make deci-sions on future direction. Based on the decisions, seven steering committees are requested to plan and implement pertinent activities.

1) DJSI: Dow Jones Sustainability Indices2) K-SDGs: Korean Sustainable Development Goals

In the CSR Strategy Committee meeting in 2019, we reviewed the 2018 DJSI evaluation results in the areas of health and safety, social contribution and product responsibility, shared latest CSR issues, and discussed their potential impact on our business and measures. In the CSR 3.0 session, best practices in terms of business management strategy, qualitative value, and internalization by employees were presented. Participants discussed how to reflect them to the company’s business operations. As all of the participants agreed on the necessity for setting targets in the long term, a decision was made to establish mid- to long-term CSR goals.

2019 CSR Strategy Committee

Each CSR streering committee operates under the supervision of the heads of pertinent divisions or departments to ensure CSR activities are aligned with business works. With a commitment to realizing the CSR Vision 2020 Roadmap, sub-committees engage in activities according to implementation plans. Quar-terly meetings are held at the steering committee level in which related teams discuss issues identified during the implementation of short-/mid-term tasks and set the direction and targets of the next year. The CSR Team monitors meet-ings and provides guidance on critical issues by analyzing the opinions of inter-nal and external stakeholders and results of external evaluations, and bench-marking leading companies.

· Reviewing the 2018 DJSI1) assessment results: identifying items for improvement

· Reflecting social value· Setting mid-/long-term

goals for CSR manage-ment

Agenda

Date: March 20, 2019 Attendees: A chairperson and members of the CSR Strategy Committee, and the heads of seven steering committees

· Announcing K-SDGs2)· Expanding the scope of the policy

and initiatives on the use of renew-able energy

· Addressing the issue of an inflow of microplastics into the ocean

· Strengthening CSR management in the supply chain

· Conducting CSR activities utilizing IT technology

· Establishing transparent corporate governance

CSR management status at Hankook Tire & Technology

Latest CSR issues

CSR 3.0

Operation and Monitoring of the CSR Committee

· Check progress and resolve issues

· Participation of relevant employees

· Check progress and review strategies

· Implement CSR initiatives by team in consideration of action plans

· Promote improvement initiatives and make efforts for achieving KPIs

· Check CSR activities and achievements of the committee and offer feedbacks

· Share CSR issues and discuss resolutions

· Review CSR policies and mid- to long-term strategies

· Review annual CSR outcomes and mid- to long-term strategies

· Share and review key CSR issues

· Report key issues· Key performance

reporting and Discuss strategy direction

· Report progress and identify issues

CSRImprovement

Initiatives

CSR SteeringCommittee

CSR StrategyCommitteeMonitoring

Process

Primary Activities

Meeting Year-round Quarterly Annually


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CSR Management in Our Overseas NetworkWe have expanded the scope of our CSR management and are maintaining related systems across all our overseas networks, including the China Headquarters’ CSR committee launched in 2012 and a CSR management system for the America Headquarters established in 2018. CSR activities are planned, implemented, and moni-tored on an annual basis. Where necessary, the CSR Team provides guidance to support these activities at the company level.

Free medical support Clean Campaign

Head of the Hankooktire China Headquarters

Chinese CSRCommittee

Environment and Safety Committee

Employee Committee

Corporate PhilanthropyCommittee

Ethics Management Committee

Risk Management Committee

HP)JP)CP)1)Environment &

Safety Team

CHN)Human Resource Management &Education Team

CHN)Corporate Management Team

China

Head of the Hankooktire Europe Headquarters

Europe

EHS Climate Change EmployeeEthics

ManagementCorporate

Philanthropy EmployeeCorporate

PhilanthropyEthics

Management

MP)3)EHS Team

MP)Human Resource

Operations& Education

Team

MP)CorporateManagement Team

Managing Director of Hungary Plant

Director of EUR)Corporate Management Department

EUR) Corporate

Management Team

EUR)HR Team

Indonesia Plant, and the Asia-Pacific, Africa & Middle East Division

IP)4)Corporate Management TeamIP)Human Resource

Operations& Education Team

Head of the Production & Engineering Staff Office

Head of the Indonesia Plant Marketing Strategy Team (APAM)

AP)Marketing Strategy Team

Head of the Asia-Pacific, Africa & Middle East Division

EHS Climate ChangeCorporate

Philanthropy EmployeeEthics

ManagementEthics

ManagementCorporate

Philanthropy

America Head of the Hankooktire America Headquarters

Managing Director ofTennessee Plant

Director of AMC) CorporateManagement Department

Corporate Philanthropy

Ethics Management Employee

AMC)Corporate Strategy Team

AMC)Human Resource

Team

TP)Corporate Management Team

AMC)Purchasing

Team

EHS ClimateChangeEthics

ManagementCorporate

Philanthropy Supplier

Best practices 1.5% decrease of accident KPI at the Hungary plant Our plant in Hungary launches an annual campaign of ten safety rules at worksites to thoroughly manage the work environment. Through the operation of the Work Safety Committee, potential risks factors are identified and addressed to ensure that a culture of safety is established. The plant provides workers from other countries, including Ukraine and Mongolia, with training and tests in their languages. In addition, an EHS Award is given to motivate employees. As a results of its multifaceted efforts, the accident KPI is recorded at 0.67, which is below the target of 0.68.

Customized social contribution activities at the Indonesia Our Indonesia plant is making a lot of efforts to protect the environment and meet the needs of local residents. A wide range of activities are conducted, including providing free food to low income fam-ilies and free medical support to students in poor hygienic conditions, and launching clean campaigns. In addition, the plant has continued to operate one of our mobility projects, a tire donation program. In 2018, it donated a total of 369 tires.

CHN)Corporate Strategy Team TP)

2)EHS Team

1) HP : Jiangsu Plant / JP : Jiaxing Plant / CP : Chongqing Plant

3) MP : Hungary Plant 4) IP : Indonesia Plant

2) TP : Tennessee Plant


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Stakeholder communication and participationWe group our stakeholders in consideration of their impact on our business activities. Key issues and stakeholder opinions identified through a variety of communications channels are reflected in our business operations to ensure that sustainable value is created.

We categorize our stakeholders as the key group and general group. The key group directly affects and is affected by us, while the general group has a more indirect or potential impact. Our CSR issues are identified through communi-cation with stakeholders and analyses of internal and external corporate envi-ronments. We share our CSR performance and targets with them and operate a variety of communication channels to listen to their opinions.

Annual Communication Process with Stakeholders

Governance

Execution

Review

Stakeholderanalysis

Communicationplanning &scheduling

Selection ofcommunication

targets bystakeholder

Performancemanagement and

reporting

Commitmentproposal

Adoption andexecution

Collection ofexpectations and

requirements

Collection ofstakeholderfeedbacks

Adoption topolicies and

strategies

Linkage withcorrective actions

Stakeholder Model

Core Stakeholders Click

General Stakeholders

NGOs & CivilGroups

Press & Media

Competitors InternationalOrganizations

LocalGovernments

CentralGovernment


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Stakeholder CommitteeAmong the ten key issues identified through a materiality analysis, we select-ed an issue that requires in-depth analysis and opinions from external experts, and held a meeting of a stakeholder committee in August 2018. The selected issue was ‘preventing safety accidents,’ which ranked third in the 2018 materi-ality analysis and again in the upper ranks in 2019, receiving considerable attention from stakeholders. At the committee meeting, a panel consist-ing of experts from academia, public institutions, and the tire industry en-gaged in an in-depth discussion with our employees from EHS-related teams.

Our plan for improvement is as follows :We will re-examine our Vision 2020 Roadmap, prioritize issues, and reflect findings in the upcoming Vision 2020 Roadmap. To ensure that a culture of safety is created, detailed plans for identifying and addressing potentials risks will be established based on the interviews of employees across a wide range of positions. We plan to ex-pand the scope of existing training programs only for production employees by offering ones aimed at managers and other employees to nurture safety professionals. All of opinions and feedbacks at the stakeholder committee will be considered and reflected in our activities for promoting safety at worksites.

Stakeholder Committee

External participants

Agenda ① A briefing on the materiality analysis of the 2017/18 CSR report ② A briefing on the Hankook Tire & Technology EHS Vision 2020 Roadmap ③ A review on our Vision 2020 Roadmap and discussion

Date August 16, 2018Venue Hankook Tire & Technology Geumsan plant

Participants managers at the Hankook Tire & Technology Deajeon and Geumsan plants and executives responsible for EHS

(External participants)


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AreaProgress

2020 Commitment2017 2018 2019 2020

CSR management system

Establishing the system in the America Headquarters

Running an organization responsible for EHS

̇ Promoting a CSR management system in our overseas network

˙ Operating CSR committees by function

Providing guidance and support for CSR management

Providing guidance and support for CSR management

Customer satisfaction and quality management

Car makers

Presenting concept tires for Volkswagen and EVs

Participating in Ford’s fundraising event for children’s diabetes for the children's diabetes foundation the North American International Auto Show; and Auto Shanghai

Diversifying communication activities (PRM1)); strengthening PR activities regarding future tire technology; and increasing the participation in fundraising events hosted by carmakers

˙ Strengthening capacity in terms of technology and quality

˙ Satisfying customer needs by securing future-oriented technology

Winning a contract on the project for future-oriented and eco-friendly tire

Expanding the portfolio of eco-friendly tires: supplying tires for EVs (Hyundai Ioniq)

Increasing the supply of future-oriented and eco-friendly OE tires; and innovating our development quality assurance system

Customers and dealers

Promoting 7-step SMART customer response through e-learning

Offering training programs on shop operation: 661 franchise owners took part in the programs.

Providing franchise owners with the programs

˙ Offering customer-oriented service and expanding communication channels by securing franchise leadership

˙ Providing free mobile vehicle check-up service (200 times per year)

Offering the SMART CARE service Launching T’Station.com Providing total automotive care service (establishing standards for franchise business; and developing service related to Car Life)

Expanding the scope of free mobile vehicle check-up service

Providing free mobile vehicle check-up service (174 times)

Conducting activities to promote communication with customers

Employee health and safety

Establishing of Self-Control safetymanagement system

Running monthly EHS Innovation TFT meetings and quarterly EHS advisory committee meetings

Safety management (Design For Safety, Near Miss, and contractors) ˙ Improving the work environment and strengthening employee health management

˙ Developing and promoting a culture of safety

˙ Frequency Severity Indicator (FSI) : 0.55

Addressing equipment and work, particularly in the mixing process, that may cause musculoskeletal diseases

Developing musculoskeletal disease prevention programs

Promoting musculoskeletal disease prevention programs

Managing and updating the programs

Offering counseling for stress management to 1,291 employees

Providing 623 managers/supervisors with programs on how to deal with suicidal thoughts and depressed feelings

Offering employees stress-level tests and analyses and counseling service

Improving the work environment: enhancing local ventilation for increased efficiency

Conducting the biannual work environment measurement and improving local ventilation systems

Strengthening work environment management

Managing and updating the programs

Employee value creation

Selecting a total of six Facilitators from Divisions to promote human rights

Providing programs om awareness-raising on people with disabilities to 6,663 employees

Giving employees training programs on human rights

˙ Ratio of female leaders : 4.4%˙ Promoting human rights at the

global level˙ Upgrading a system to enhance

diversityUpgrading a human rights diagnostic testTaking follow-up measures and monitoring results

Checking the operation of a grievance system at worksites

Taking improvement measures for issues identified in the operation of grievance channels

Promoting diversity: a total of 172 employees with disabilities (accounting 2.5% of total employees)

Promoting diversity: a total of 204 employees with disabilities

Continuing efforts to supporting female employees and considering employees with disabilities

CSR Vision 2020 RoadmapWe established the CSR Vision 2020 Roadmap in 2017 with activities to be conducted on an annual basis to achieve set targets by 2020. Our efforts to implement the roadmap will continue through 2019 and we are preparing a Vision 2030 Roadmap by review by each sub-committee.

1)PRM: Partner Relationship Management


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AreaProgress

2020 Commitment2017 2018 2019 2020

Transparency and business ethics

Refining the code of ethics in August Running a pilot test of a risk assessment management tool

Ethics management risk assessment: establishing a management tool; formulating procedures for different levels of risks; conducting a risk assessment on a regular basis; and taking measures for improvement

˙ Internalizing ethics management through communication

˙ Having our ethical management system externally certified

Providing regular training on ethics management to 2,300 employees

Offering regular online training on ethics management to all of our office and technical employees

Providing regular training on ethics management (common / by job position / by task characteristics); and translating guidebooks in local languages

Promoting communication: launching an awareness-raising campaign

Promoting communication: increasing the efficiency of a reporting system; and raising awareness on ethics management

Win-win partnership in the supply chain

Reflecting CSR elements in selecting suppliers

Updating and reviewing CSR-related clauses in contracts and company rules

Strengthening the utilization of sustainability guidelines for suppliers

Keeping updated CSR elements in company rules

˙ Developing supplier CSR support programs

˙ Ratio of suppliers assessed in CSR : 85%

˙ Identifying critical tier 2 (secondary) suppliers by 2030

Conducting CSR audits for suppliers and improving audit items

Completing on-site CSR audits for machinery suppliers

Conducting CSR assessment for suppliers

Declaring the Sustainable Natural Rubber PolicyParticipating in the Global Platform for Sustainable Natural Rubber (GPSNR) as a founding member

Establishing and implementing an action plan for Sustainable Natural Rubber

Preparing for the work of identifying the CSR management status of secondary suppliers

Expand the scope of CSR management for suppliers : primary → secondary

Integrated environmental management

Upgrading a chemical management and evaluation system Establishing a chemical inventory Developing and operating an IT system for chemical management

˙ Ratio of eco-friendly products : 60%

˙ Waste disposal itensity: 40kg/ton of finished productRenewing the eco-design simplified

LCA

Setting the target for the use of sustainable material - Increasing the use of renewable carbon and rubber

Establishing mid- to long-term targets in the use of green products - Enhancing RR1) and making lightweight products

Conducting LCA for two products in the Chongqing plant

Running LCA2) for two products in the Daejeon plant

Expanding the scope of products for LCA

Waste volume: 8 percent decrease from 2016

Conducting activities to reduce a manufacturing defect rate

Setting mid-/long-term targets in the intensity of waste discharged - Reducing waste from manufacturing process - Finding more recycling companies

Climate change and GHG management

Setting mid-/long-term targets for reducing GHG emissions

Introducing Energy Management System (ISO 50001)

˙ GHG emissions intensity (tCO2-eq/ton of finished product): reducing 5% by 2020 and 15% by 2030 (base year: 2013)

Upgrading the e-Saver (IT system for energy management)

Promoting the e-Saver at the enterprise level

Reducing GHG emissions by 24,319tCO2-eq

Reducing GHG emissions by 17,408tCO2-eq

Conducting activities to save energy and reduce GHG emissions (improving efficiency and recycling energy)

Implementing carbon neutral programs

Reviewing the feasibility of introducing photovoltaic power generation and ESS3)

Conducting a feasibility study on cogeneration and purchase of low-carbon steam

Reviewing the introduction of new technology and renewable energy

Community involvement and development

Promoting mobility: expanding the scope of car donation (40 cars in 2016 → 50 cars in 2017)

Donating 50 cars to welfare centers Conducting marketing activities in line with public campaigns ˙ Annual volunteer hours per employee : 4.5 hours

Launching and upgrading an IT system to manage volunteer activities

Launching volunteering teams in overseas plants (in China and the US (Tennessee))

1) RR: Rolling Resistance 2) LCA: Life Cycle Assessment 3) ESS: Energy Storage System


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18

Materiality AnalysisWe identify material issues considering their impact on our business and stakeholder interest, conduct activities and report the performance. The issues with higher priority among them are selected as focus areas that are managed under the CSR Steering Wheel.

Internal environment analysisIn-house policies· 2019 strategic tasks of Hankook Tire & Technology

Previously-selected CSR issues· Issues in the 2017/18 CSR report

External environment analysisInternational standardsㆍGRI Standard, DJSI, RBA, SDGs

Media research· 6,346 media articles related to the CSR of Hankook Tire & Technology (from Jan. to Dec. 2018)

Benchmarking of leading companies· CSR reports of six companies in the tire industry

When we collected issues, global CSR frameworks, including GRI1) Standard, DJSI, RBA2), and SDGs, were considered. Issues were re-categorized and re-de-fined through conducting media research, benchmarking leading companies and analyzing internal corporate policies. As a result of internal and external en-vironment analyses, we defined a pool of 27 issues under 11 categories.

We conducted activities to identify stakeholder interest and business impact regarding the 27 issues under 11 categories. A survey was con-ducted for a variety of stakeholders. The business impact of the issues was studied by reviewing in-house policies, standards, laws and reg-ulations, conducting media research and benchmarking domestic and international tire companies.

Target groups (Unit: person)

Survey period: April 1~5, 2019

Step 1: collecting issues Step 2: identifying stakeholder interest and business impact

11 categories27 issues

378

5714202645

59

77

81

96

Customers (individuals) 96 / 11.9%

CSR personnel from other companies 77 / 9.5%

Employees 378 / 46.8%

Business partners (franchise owners/dealers) 81 / 10.0%

Business partners (suppliers) 59 / 7.3%

NGOs and NPOs 26 / 3.2%

Academia 14 / 1.7%

Customers (car makers) 5 / 0.6%

Research centers and CSR consulting companies 45 / 5.6%

Shareholders, investors, and analysts20 / 2.5%

Government and public agencies7 / 0.9%

Total

808

1) GRI: Global Reporting Initiative 2) RBA: Responsible Business Alliance


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19

Materiality Analysis Matrix

13

12

21

16

19

5

15

25

12

3

4

68

22

11

10

Stak

ehol

der I

nter

est

17

23

2718

20

24

26

914

7

* Issues with no value in the Up/Down are the ones integrated, separated, or newly identified in the Step 1.

CategoryMatrix No.

Materiality Material Issues Page2018 Change 2019

Customer Satisfactionand QualityManagement

2 ∆1 1 ● Achieve excellent operating performance and expand employment 6, 9, 70, 73

1 ∇1 2 ● Expand R&D investment and reinforce capabilities 30, 49

7 ∆4 3 ● Develop products and services for customer safety & health 7, 29~33

24 ∆16 8 ● Enhance customer satisfaction activities for customer retention 33

20 ∇4 24 ● Protect personal information of customers -

18 ∇7 25 ● Provide customers with accurate information on p roducts and services 7, 29~33

EmployeeHealth and SafetyManagement

12 ∆8 4 ● Improve working environment and health management 36~37

3 ∇3 6 ● Prevent and manage safety accidents 36~37

Climate Change and GHG Management

14 ∆9 5 ● Reduce GHG & air pollutants emissions 40~41

16 ∇3 19 ● Adapt to climate change (risk management) 40~41

Employee Value Creation

17 ∆10 7 ● Win-win labor-management relationship through open communication 44~46

8 ∇2 10 ● Support the growth of employees 44~46

6 ∇5 11 ● HR system to ensure fair evaluation and compensation -

23 ∆9 14 ● Work & life balance 44~46

4 ∇14 18 ●Conducting activities for human rights protection and awareness-raising (promoting diversity; no discrimination; no child/forced labor)

44~46

IntegratedEnvironmentalManagement

11 ∆2 9 ● Minimize environmental impacts in entire process (materi-als collection, transport, manufacturing, use, and disuse) 49~51

25 ∆12 13 ● Use of sustainable resources 49~51

22 ∇4 26 ● Protect ecosystem and biodiversity around worksites 56

Community Involvement andDevelopment

19 ∆3 12 ● Promote philanthropic activities in consideration of thefeatures of local communities 54~55

15 ∇3 22 ● Make efforts to vitalize local economy 57Transparency and Ethics Management 5 ∇10 15 ● Strengthen anti-corruption activities 61~62

Win-Win SupplyChain Partnership

21 ∆5 16 ● Reinforce policies and activities for win-win growth with suppliers 67

10 ∇7 17 ● Enhance suppliers’ sustainability management (evaluation, risk, etc.) 65~66

Responsible CorporateGovernance

9 ∇12 21 ● Operate the BOD soundly and secure transparency 22~23

Integrated RiskManagement 13 ∇10 23 ● Establish company-wide crisis management system 24~25

Other - - 20 ● Disclosing the performance of sustainable management in a transparent manner 29

- - 27 ● Measuring social impact -

● Key managerial issue ● General managerial issue

Business Significance

We prioritized 27 issues reflecting the results in Step 2. Higher priority was given to topics including: achieving outstanding business performance and increasing em-ployment; strengthening R&D capacity and promoting investment; and developing products and services considering customer health and safety. In this report, our performance and targets regarding ten key issues are described in a transparent manner.

Step 3: prioritizing issues


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CSR Steering Wheel 2018/19

Based on our integrated CSR management system, we defined eight focus areas: cus-tomer satisfaction and quality manage-ment; employee health and safety man-agement; employee value creation; ethics management; win-win partnerships in the supply chain; integrated environmental management; climate change and GHG emissions management, and communi-ty involvement and development. Ten key issues selected based on the materiality analysis are mapped to these areas and our achievements and plans regarding them are described in this report.

MON

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Focu

s 08

Transparency and Business EthicsFocus 07

Focus 06 Focus 05

Focu

s 04

Focus 02Focus 01

Click to view the content.


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Responsible Corporate GovernanceIntegrated Risk Management

CSR FOCUS AREAS

APPENDIX

22

Responsible Corporate Governance

DeclarationHankook Tire & Technology initiated the Professional Management System in early stage and has adhered to the separation of ownership and corporate man-agement, which serves as a model in business. We are committed to maintain-ing healthy corporate governance and transparent business conduct.

Major ShareholdersThe following indicates the status of our major shareholders and their owner-ship as of December 31, 2018.

BOD CompositionThe BOD features two internal and three external directors. Directors are ap-pointed at the general meeting of stockholders. Candidates are selected by the board and by a non-executive Director Recommendation Committee. Appointed directors are listed in the table below. All of our external directors hold no vested interest in the company, management, or shareholders. BOD with expertise and a heightened sense of responsibility

Our external directors, a majority of the BOD, are selected based on their experi-ence and expertise in industry, finance, academia, law, accounting, and the pub-lic sector. They undergo a transparent and fair recommendation process by the Non-executive Director Recommendation Committee. At the general meeting of shareholders, those who specialize in the areas of business management, legal affairs, or accounting and meet the qualifications under the pertinent laws are appointed as external directors to oversee management and offer them guid-ance in their decision-making process.

Evaluation and remunerationIn regard to remuneration of the directors and auditor, incentives are provided according to the evaluation results of the company’s performance using eco-nomic, social and environmental indicators. The remuneration limit approved in the general shareholders meeting is at KRW 10 billion.


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APPENDIXMajor Shareholders No. of Shares Ownership (%)

Hankook Technology Group 37,408,655 30.20

Cho Yang Rai 7,019,903 5.67

Cho Hyun Bum 2,561,241 2.07

Cho Hyun Shick 799,241 0.65

Others 76,086,029 61.41

Total 123,875,069 100.00 Appointment Retirement

Executive director

Director Cho Hyun Bum re-appointed Director Seo Seung Hwa retired

Director Lee Soo Il newly-appointed

Non-executive director

Director Cho Choong Hwan re-appointed Non-executive director Cho Kun Ho retired

Director Hong Sung Phil re-appointed

Director Jung Chang Hwa newly-appointed

Director No. of Persons Total Remuneration Average Remuneration per Person

Executive director 3 1,831 610

Non-executive director(Audit Committee member) 4 162 41

Total 7 1,993 285

Director Name Position Relationship with the Largest Shareholder

Period of Tenure

Executive director

Cho Hyun Bum1) President, CEO Executive at an affiliate

2012.09.01~2021.03.25

Executive director

Lee Soo Il President, COO Executive at an affiliate

2018.03.26~2021.03.25


Cho Choong Hwan Audit Committee member

N/A 2012.09.01~2021.03.25


Hong Sung Phil Audit Committee member

N/A 2012.09.01~2021.03.25


Jung Chang Hwa Audit Committee member

N/A 2018.03.26~2021.03.25

* As shown in the table below, the composition of BOD was changed based on the decision at the regular general meeting of shareholders on March 26, 2018. Therefore, the figures above included both incumbent and retired directors as of Dec. 31 2018.

(Unit: KRW in millions)Remuneration of the BOD Members and Auditors

1) Chairman of the BOD

23

Top Management’s Decision-Making ProcessThe BOD is at the core of our decision-making structure at Hankook Tire & Tech-nology. We strive to fully gather stakeholder feedbacks and align them to actual outcomes by identifying necessary tasks at various meetings. We also continue to build a corporate culture where stakeholder feedbacks are reflected in the top management’s decision-making through active communication.

BOD MeetingsIn 2018, four regular and four ad-hoc BOD meetings were hosted.

BOD Meetings for the Past Five Years

Operation of Subcommittees under the BOD in 2018 We operate four subcommittees under the BOD: Audit Committee, SustainabilityCommittee, Non-executive Director Recommendation Committee and the Inter-nal Transactions Committee. These subcommittees meet both on a regular and ad-hoc basis.

Year Regular Meetings Ad-hoc Meetings Attendance Rate of Non-executive Directors

2014 4 6 93.3%

2015 4 7 78.8%

2016 4 4 91.7%

2017 4 4 91.7%

2018 4 4 91.7%

Committee Composition Responsibility Operation

Audit Committee Three non-executivedirectors

- Audit accounting and business operations- Investigate corporate financial assets- Handle matters stipulated in government

regulations and the articles of incorporation as well as matters commissioned by the BOD

- Request directors to report business operations- Request the appointment of external auditors

Four regularand four ad-hocmeetings

SustainabilityCommittee

Two executivedirectors

- Deliberate and decide on general management matters

- Deliberate and decide on financial matters

As needed

Non-executive DirectorRecommendation Committee

Two executivedirectors and threenon-executivedirectors

- Recommend non-executive director candidates Two meetings

Internal TransactionsCommittee

Three non-executivedirectors

- Approve large-scale internal transactions One meeting

Gatheringstakeholder

feedback

Gatheringstakeholder

feedback

General shareholder meeting

Reporting

Reporting AuditingSupport & checkReporting

management information

ReportingAppointment Appointment

BOD

Monitoring,check,

deliberatingon major agenda

items

AuditCommittee

Monitoring,check,

deliberatingon major agenda

items

CEO Variousmeetings

Discuss anddecide on majorcompany-wide

issues


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Integrated Risk Management

To ensure corporate sustainability, it is imperative to identify a variety of po-tential financial and non-financial risks to business activities. In this regard, we are systematically monitoring risks, conducting activities for prevention, and strengthening our capacity for emergency response and recovery.

Financial risksA variety of financial risks are monitored by the Finance and Accounting Depart-ment of the Corporate Management and Finance Staff Office. In the quarterly Financial Risk Management Committee, key issues are reviewed and response strategies are formulated.

FinanceIn 2018, the global economy experienced turbulence stemming from the trade war between the US and China. Domestically, sluggish economic growth led to negative conditions. Amid a difficult situation, we successfully issued global in-vestment bonds to enhance our credit standing while increasing the percentage of borrowing at fixed interest rates in preparation for a US interest rate hike.

Foreign exchangesAs our global sales activities expanded, a total of 31 foreign currencies are now being used. To minimize the related risks, current transactions, including export and import, and deposits and borrowing are all conducted in local currencies. Meanwhile, we strive to minimize our foreign currency position through the prin-ciple of using the same currency for bill collection and payment. Any foreign cur-rency position that is over the predetermined limit is managed in accordance with pertinent corporate rules.

LiquidityThe debt, liquidity and cashflow of each subsidiary is managed from the per-spective of global business operations. When the finance market is volatile, we focus on the stability of our financial structure through conservative liquidity management. In addition, we utilize cash pooling- which allows the concentra-tion of cash to make it centrally available among overseas subsidiaries- in order to minimize liquidity risks, ease the burden of fund management, and reduce fi-nancial costs. Furthermore, we are operating a Global Cash Management System in which the funds of our overseas subsidiaries, including regional headquarters, are centrally managed.

Hankook Tire & Technology is making every effort to fulfill its responsibility by paying taxes in good faith in accordance with the following tax policies: ㆍ We pay taxes in compliance with all pertinent laws and regulations in the countries of our

presence.ㆍ We do not use any kinds of tax structures or systems intended for tax avoidance and do

not transfer profits to low-tax countries.ㆍ We are applying a transfer pricing analysis methodology to all of our overseas

manufacturing/sales subsidiaries:- We are applying the transactional net margin method from the OECD Guidelines. This pric-ing method is based on comparisons made at the net profit level between the taxpayer and independent parties in relation to a comparable uncontrolled transaction or dealing.

- In determining transfer pricing, manufacturing subsidiaries are using the Full Cost Mark-up while the operating profit margin ratio or the Barry ratio is applied to sales subsidiaries.

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Non-financial risksBased on the characteristics of identified risks, they are monitored by respon-sible teams, regularly reviewed by a pertinent committee, addressed by a task force, or managed through emergency response measures at worksites

Business continuityWe have maintained ISO 22301 certification by operating a Business Continu-ity Management System at our plants in Daejeon and Geumsan, Korea and in Hungary. ISO 22301 is an international standard allowing companies to ensure business continuity by quickly recovering key business operations in the event of accidents or disasters. In accordance with this standard, we identified all of our production activities from raw material procurement to product manufacturing and supply, based upon which a business continuity plan was formulated to spotlight potential risks. In addition, an emergency response organization was set up to create a manual for emergency situations and conduct annual mock exercises.

Laws and regulationsTo manage legal risks, we review contracts for domestic and international proj-ects, provide legal advice for teams/divisions carrying out their tasks, and resolve disputes such as lawsuits and mediation. As part of the efforts to promote com-pliance management, diagnoses are conducted on compliance with the Privacy Protection Act regarding our collection and use of customer information, and with the Fair Trade Act as well. Improvement measures are taken based on the results. In addition, training on the prevention of sexual harassment is provided at domestic and overseas worksites.

Health and safetySince the occurrence of a fatal accident at the Geumsan plant in 2017, we have placed top priority on health and safety risks and further strengthened our efforts for risk monitoring and management. In 2018, a dedicated EHS organization was established. A quarterly advisory committee on health and safety was held with the participation of labor, management, and external experts. A labor-manage-ment-government task force consisting of the Regional Employment and Labor Administration and organized labor is being operated on a monthly basis. In ad-dition, the Stakeholder Committee was created to solicit advice and opinions from outside experts on priority EHS issues selected through the materiality analysis.

OtherIf there are risks that could develop into new social or environmental issues or require consistent monitoring, the seven CSR steering committees (in the areas of product environment, EHS, climate change, employees, ethics management, corporate philanthropy, and suppliers) review and discuss them on a quarterly basis and formulate strategies based on the decision of the chairperson.


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CSR FOCUS AREAS

FOCUS 01 Customer Satisfactionand Quality Management

read more >

FOCUS 03Climate Change and GHG Management

read more >

FOCUS 05Integrated EnvironmentalManagement

read more >

FOCUS 07Transparency and Business Ethics

read more >

FOCUS 02Customer Satisfactionand Quality Management

read more >

FOCUS 04Employee Value Creation

read more >

FOCUS 06Community Involvement and Development

read more >

FOCUS 08Win-win Supply ChainPartnership

read more >

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Customer Satisfaction and Quality Management (Car Maker)

BackgroundWe engage in B2B transactions when providing OE1) tires to car makers. In order to keep our promises to our corporate customers, we are making every effort to faithfully meet their requirements. It is essential to strengthen our capacity for applying new technology as required by car makers if we wish to generate profit on a steady basis. If we focus only on short-term profit in our OE business, we may incur significant financial risks. Therefore, a variety of communication activities, including R&D investment, are required in order to sustain trust with customers over the long term.1) OE: Original Equipment

Our directionAs a global business partner for car makers, Hankook Tire & Technology strives to bolster these strategic corporate partnerships based on the experience and expertise we have accumulated over the decades. To flexibly meet their needs under rapidly-changing market conditions, we make continuous efforts at developing state-of-the-art technology and enhancing quality. At the same time, greater focus is placed on strategic projects in cooperation with customers to lay groundwork for the development of market-leading technology. In addition, we are strengthening communication activities by responding to increasingly important CSR requirements.

Achievements

Future plan and mid-/long-term targetsWe will do our utmost to develop and supply products with high performance and quality that meet customer needs through multi-faceted activities, including exhibitions and exchange meetings. In particular, our focus will be on strength-ening business relationships with our customers by improving product perfor-mance for future automobile technology, expanding the supply of our products, and proactively responding to CSR requirements.

Organization

On-going communication with car makers

Conducted a variety of activities to communicate with car makers- joint projects for concept tire-making,

sponsorship of CSR-related events, and support for event shows

Strengthening product competitiveness

Developed technology and secured quality competitiveness- Strengthened technological capacity through

the advancement of a development process- Provided training on quality awareness raising

to 14,211 employees

Chaired byOE Division Director

SupervisorGlobal OE Planning Team, G.OE PM Team, Global OE Sales Team 1·2,

Europe·America·China·Japan·ASEAN-India OE Sales Team

Cooperation membersOE Development Team , TB Development Team, Development Quality Assurance Team,

Global OE Quality Team, Technical Centers in Europe, America, Japan, and China


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Focus 01Customer Satisfaction and Quality Management (Car Maker/ General Customers and Dealers)Employee Health and Safety Management Climate Change and GHG ManagementEmployee Value CreationIntegrated Environmental ManagementCommunity Involvement and DevelopmentTransparency and Business EthicsWin-win Supply Chain Partnership

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28

Managerial Issue2018 2019

Goals Achievements Completion Plans Deadline Responsible Team

On-going communication with car makers

Conducting a variety of activities to communicate with car makers

ㆍ Promoted communication with customers by region, car makers, and category

ㆍ Concentrate on partner relationship management by sponsoring social contribution events, inviting car makers to sports events sponsored by Hankook Tire & Technology, and conducting collaboration projects of concept tire-making

2020 Global OE Sales Team, Global OE Planning Team, G.OE PM Team , Regional OE Team

ㆍ Promoted communication activities with global car makers for future tire technology development

ㆍ Seek cooperation with manufacturers of future-oriented EVs for technological communication

2020

Meeting the requirements of car makers

ㆍ Actively respond to sustainability evaluation and take follow-up measures

- Selected as a Highest Supplier at the Renault’s Suppliers Award

ㆍ Proactively respond to sustainability evaluation and take follow-up measures

As needed CSR Team

Strengthening product competitiveness

Developing high-performance products that meet the requirements of car makers

ㆍ Reached the performance target as required by car makers in terms of RRc1) for developing future-oriented and eco-friendly tires for EVs and HEVs

ㆍ Develop optimal tires for EVs and HEVsㆍ Meet the performance target for RRc required due to the

implementation of WLTP2)

2020 Global OE Sales Team, Global OE Planning Team, G.OE PM Team , Regional OE Team, OE Development Team

Establishing a zero-defect quality assurance system

ㆍContinued efforts to advance a development process ㆍUpgrade a development quality assurance system- Secure consistency in quality (processes, raw materials, semi-

products and finished products) and strengthen the verification of products and processes

2020 Quality Division, R&D Staff Office, Production & Engineering Staff Office

Employee awareness-raising of quality

ㆍ Upgraded a training system for employees on the shop floor to help them have expertise in their work

ㆍ Improved educational content

ㆍAccelerate efforts for capacity-building focusing on quality- Support employees responsible for quality assurance to have

expertise in their work

2020 Global Quality Planning Team

1) RRc: Rolling Resistance coefficient 2) WLTP: Worldwide Harmonized Light Vehicle Test Procedure

Completed Partially Completed PreparingHANKOOK TIRE & TECHNOLOGY 10th ANNIVERSARY REPORT 2018/19

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Participation in the IAA exhibition

Official sponsor of DTM

On-going communication with car makersWe strive to strengthen customer-oriented marketing communication activi-ties, including concept tire-making and PRM, to develop and promote mutually beneficial relationships with car makers.

Promoting mutual trust through communication with car makersTrust-based communication To proactively respond to the requirements of car makers, we have promoted close relationships with them through business meetings and marketing communication activities. As a result, we received a Supplier of the Year award from General Motors in 2018.

Communication through partner relationship management activities and events In 2018, we attended a Ford Motor Company fundraising event to com-bat juvenile diabetes and placed an ad in General Motors Magazine. Through two collaborative projects with Volkswagen, we presented future-oriented con-cept tires at the North American International Auto Show, Auto Shanghai, and IAA (International Automobile Ausstellung), which provided an opportunity to not only strengthen relationships with this company, but also to showcase our own technology. In addition, we invited European carmakers to DTM (Deutsche Tourenwagen Masters) as an official sponsor to further our business relations.

Communication through exhibitions and events We have diversified a port-folio of our OE tires by supplying tires for 39 new cars, including Porsche Cay-enne and Volkswagen T-Roc. At the same time, strategic promotion activities were conducted by placing ads on domestic and international newspapers and attending exhibitions, such as a trade show by Thomas Built Buses and the IAA Hannover

Meeting the requirements of car makersCorporate CSR activities are becoming increasingly important indicators to external stakeholders as well. One case in point is in the supply chain management of car makers. In 2018, about 61% of our CSR-related requirements from external stakeholders originated with car makers. We proactively responded to demands from major car makers including BMW, Ford, Volkswagen, PSA, Scania, and Honda in the areas of the economy, society, and the environment in order to promote communication with them. As a result, we were selected as a Highest Supplier at Renault’s Suppliers Awards for our efforts at sustainability management.


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Brand Vehicle model Product name

Audi A1 Kinergy 4s, Ventus Prime3, Winter i*cept evo2

Q8 Ventus S1 evo3 SUV, Dynapro HP2 plus, Winter i*cept evo2 SUV, Dynapro HP2 plus

Q3 Ventus S1 evo2 SUV, Winter i*cept evo2 SUV,Ventus S1 evo 2 SUV

Benz Sprinter Vantra LT

A-Class/B-Class Ventus S1 evo2, Winter i*cept evo2, Kinergy GT

BMW 2-Series Active/Gran Tourer Ventus S1 evo2

2-Series Active/Gran Tourer/3-Series

Ventus S1 evo3

3-Series/4-Series Ventus S1 evo3

3-Series/Z4 Ventus S1 evo3, Winter i*cept evo2

X5/X6 Ventus S1 evo3 SUV

Ford F-150 Dynapro AT2

Focus Ventus Prime3

Mondeo Ventus Prime3

Ranger Dynapro HT, Dynapro AT M

HMC Eon Kinergy Eco2, Kinergy Eco2

i40 Ventus Prime2

NEXO Ventus Prime2, Ventus S1 evo2 SUV

Santafe Dynapro HP2, Ventus Prime 3X

Tucson Ventus Prime 3X, Ventus Prime2, Ventus S1 evo2 SUV

Verna Kinergy EX

KMC Cee'd Kinergy Eco2

K9 Ventus S1 evo2

Soul Kinergy Eco2, Kinergy GT, Ventus Prime3, Ventus S1 noble2

Sportage Ventus Prime2, Ventus S1 evo2 SUV

Mini Mini Kinergy Eco

Porsche Macan Ventus S1 evo2 SUV

Volkswagen Caddy Ventus Prime3, Kinergy Eco2

Nissan Altima Kinergy GT

Ssangyong Rexton Dynapro HP2

The 2018 list of new OE tires Strengthening product competitivenessWe are making every effort at technological development and quality enhance-ment to provide optimal products. Considering the tougher emissions criteria and rising technological requirements that we must face, we are focusing on developing high-performance tires, strengthening cooperation with global car-makers as strategic partners, and contributing to the overall growth of the auto industry.

Developing high-performance products that meet the requirements of car makersExpanding the scope of eco-friendly tires As a result of our efforts to meet GHG emissions reduction requirements, we signed a contract with Hyundai Motors to supply tires for its Ioniq (BEV/PHEV). In addition, we developed tires that can contribute to enhanced fuel efficiency in line with the Worldwide Harmonized Light Vehicle Test Procedure (WLTP), receiving a positive response from both car makers and consumers. We also pursued cooperation with EV manufacturers to expand our OE business. Going forward, we will continue our efforts to diversify a portfolio of OE tires by entering new EV markets through business partnerships with manufactures of future-oriented EVs, such as MicroSnap.

Establishing a zero-defect quality assurance systemWe are conducting activities to improve the management of semi-finished and finished products, make pertinent investments, and strengthen criteria for en-suring zero-defect quality assurance. In particular, our focus is on the evaluation of organizations responsible for production, development, and management of quality issues and risks in order to identify potential risks across the entire pro-cess from development to production.

Employee awareness raising of qualityAll employees on quality-related teams currently make a quality management pledge, but we are still continuing to expand the scope of annual awareness-rais-ing training. In addition, a new on-the-job quality training program is being pro-vided to strengthen employee capacities and quality assurance personnel are being assigned appropriately based on their job skills and performance.


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Customer Satisfaction and Quality Management (General Customers & Dealers)

BackgroundAs an increasing number of customers are developing an interest in tire and mo-tor vehicle maintenance, tire manufacturers and repair service companies are expanding the scope of their services, and a variety of online-to-offline (O2O) services emphasizing convenience and speed are being launched. Nowadays, customers are searching about products online, making customized purchases based on their personal driving conditions and preferences, and sharing their experience through social networks. Rapidly-changing consumer trends and needs demand that the tire industry to innovate and adapt. Simply applying ex-isting approaches is no longer sufficient to satisfy customers. The tire industry must serve as a service platform going beyond the traditional roles of manufac-turers and distributors in order to provide new value and differentiated services in line with customer needs and trends.

Our directionAs a global business partner for car makers, Hankook Tire & Technology strives to bolster our strategic corporate partnerships with them based on the expe-rience and expertise we have accumulated over the decades. To responsively meet their requirements under rapidly-changing market conditions, we make continuous efforts at developing state-of-the-art technology and enhancing quality. At the same time, greater focus is placed on strategic projects in cooper-ation with customers to prepare the development of market-leading technology. In addition, we are strengthening communication activities by responding to in-creasingly important CSR requirements. * Mobile Marketing Sevice

For automobile customers, this provides vehicle and tire check-up service by visiting government offices, companies and venues for local events.

* Fleet Service This provides vehicle and tire check-up service for intra-/inter-city and tourist buses and cargo trucks.

Achievements

Future plan and mid-/long-term targetsIn order to offer a seamless online-to-offline customer experience through our T’Station and service network, we are preparing new services, including pro-fessional consulting for customers, pick-up, and delivery. In addition, we will make quality our top priority in order to meet customer requirements and pro-mote satisfaction while creating a virtuous cycle in our business operations. To achieve our ultimate goal of providing our customers with safe driving, a wide range of customer communication activities will be conducted. Our efforts at providing differentiated services for customer satisfaction will be sustained as we reflect rapidly-changing trends and needs.

Organization

Included in the 2019 Korea Brand Power Index (K-BPI)

Ranked first for the eleventh consecutive year

Automobiles that received our mobile marketing service

5,596

Fleet Service 61 times

Chaired byHead of the Car Life Business Headquarters

SupervisorRetail Marketing Team

Cooperation membersPCR Channel Marketing Team, TBR Channel

Marketing Team, Retail Business Innovation Team, Marketing Strategy Team

Chaired byQuality Division Director

SupervisorKorea Technical Service Team

Cooperation membersRetail Marketing Team and pertinent divisions

General Customers Franchises & Dealers


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Managerial Issue2018 2019

Goals Achievements Completion Goals Plans Deadline Responsible Team

Win-win management

Offering training programs on shop operation

ㆍ Held four sessions of training on strengthening distribution capacity and improving business operations for a total of 661 participants

Offering training programs on shop operation

ㆍ Distribution capacity building: promote sell-out; share distribution policies; and spread the knowledge and information on shop operation

Dec. PCR Channel Marketing Team

ㆍ Provided a total of 354 participants with an introductory training for new shop owners (4 sessions), and programs on product knowledge (6 sessions), sales techniques (6 sessions), and shop management (6 sessions)

ㆍ Provide an introductory training for new shop owners: profit-making measures, and customers

Dec. Retail Business Innovation Team

ㆍ Operated training on the repair of imported cars (6 sessions) and the wheel-alignment equipment and techniques (6 sessions) for a total of 258 participants

ㆍ Offer training for staff at our shops: technological courses for imported cars and equipment, and programs for products, sales, shop operation and service

Dec. Retail Business Innovation Team

Customer satisfaction

Enhancing customer satisfaction

ㆍ Established a database (visit, consulting, and shop closing-down): launched T’Station.com to offer a digital-based customer experience

Enhancing customer satisfaction

ㆍ Implement and utilize standardized services of a digital-based customer experience

Dec. Retail Marketing Team

Including global brands for sales

ㆍ Offered tires with different brands at T’Station : Hankook→Hankook, Michelin, Pirelli, Maxxis ㆍDevise customer royalty programs Dec. Retail Marketing Team

Customer communication

On-highway vehicle safety check-up campaigns

ㆍ Provided battery and tire pressure check-up services and tips on tire maintenance to drivers in six highway service areas in Korea (four times)

ㆍ Offered vehicle check-up service during the summer vacation season (in July)

On-highway vehicle safety check-up campaigns

ㆍ Conduct improvement activities focusing on the efficiency of on-highway vehicle safety check-up campaigns: enhancing customer satisfaction by providing services and promotional materials with their requirements reflected

Dec. Korea Technical Service Team

Free mobile vehicle check-up services

ㆍ Offered these services 174 timesㆍ Visited government offices, companies and venues of

local festivals to provide free check-up service ㆍ Launched promotional activities at T’Station shops,

including welfare programs in partnerships with companies

Free mobile vehicle check-up services

ㆍ Check a service management system Dec. Korea Technical Service Team

Completed Partially Completed PreparingHANKOOK TIRE & TECHNOLOGY 10th ANNIVERSARY REPORT 2018/19

INTRO


MONITORING AREAS

CSR FOCUS AREAS


APPENDIX

33

Win-win managementWe provide our shop owners with training programs to share a value of ‘driving for happiness’ and achieve shared growth with our customers and dealers.

Training programs on shop operationWe provided a variety of programs for our shop owners to help them effective-ly operate their businesses and increase customer satisfaction. Programs on shop operation and how to serve customers were offered and new shop owners were provided an introductory training course. In 2018, a total of 258 partici-pants received training on product knowledge, the repair of imported cars, and

wheel-alignment techniques in an effort to strengthen their professional capacities. We will step up our efforts to support shop owners and dealers to bolster their con-fidence in shop operation and ensure the provision of high-quality service to custom-ers.

Customer satisfactionTo increase customer satisfaction, our T’Station brand is offering a positive pur-chase experience and new concepts in services to customers through the sales of global tire brands, the T’Station.com web-site, and Today service.

Increasing customer satisfactionT’Station.com is a digital-based online and mobile platform that allows custom-ers to purchase tires that meet their needs. By utilizing our network of 300 T’Sta-tions across the country, customers can enjoy the same service and experience as they do offline. In particular, its Today service, a new concept of service de-vised for maximizing customer satisfaction, allows customers to have their tires installed on the day of purchase at T’Station.com.

Sales of global tire brandsTo increase customer convenience and satisfaction by providing a wide range of choices, T’Station has expanded the scope of its products to include global tire brands such as Michelin, Pirelli, and Maxxis. This allows customers to select optimal products according to their preferences and driving style. They also can enjoy ‘to-tal care’ service from experienced tire professionals using advanced equipment.

Customer communication We offer services to reach and listen to customers as a means to increase their satisfaction by improving product and service quality.

On-highway vehicle safety check-up campaignsWe set up booths in six highway service areas in Korea to provide battery, tire pressure, and oil checks along with windshield washer fluid refill. While offering these services, we provided drivers with tips on tire maintenance and informa-tion about its importance for road safety. In addition, campaigns to enhance our corporate image were conducted during the summer vacation season.

Free mobile vehicle check-up servicesTo strengthen communication with customers and promote safe driving, we provided free mobile vehicle check-up services 174 times for a total of 7,619 cars in 2018. In 2019, we plan to offer free tire pressure and wear checks and mainte-nance tips in places with a heavy car presence, such as at local festivals.

FA1) service by region

Region Seoul/Gyeonggi/IncheonBusan/

Gyeongnam ChungcheongGwangju/Honam Gyeongbuk Total

FA service(unit: time(s)) 35 10 9 4 3 61

Mobile service

Seoul/Gyeonggi/Incheon

Busan/Gyeongnam Chungcheong

Gwangju/Honam Gyeongbuk Total

Mobile service

(unit: time(s))19 16 23 24 31 113

Automobiles subject to check-up services

884 1,125 1,026 961 1,600 5,596

Multiple brands

Today service

1) FA: Fleet Account


INTRO


MONITORING AREAS

CSR FOCUS AREAS

Focus 01Customer Satisfaction and Quality Management (Car Maker/ General Customers and Dealers)Employee Health and Safety Management Climate Change and GHG ManagementEmployee Value CreationIntegrated Enviro

Documents

this Hankook Tire & Technology 10th Anniversary CSR Report ... · 2 Interactive user guide this Hankook Tire & Technology 10th Anniversary CSR Report 2018/19 is published in an interactive